DAC

I realize they are selling it for $20 to get people that might only buy one football game, be it Madden or NCAA, to try theirs. I just wonder if they are selling it below cost. I would think that they would not take a loss on it in order to get people to try their game. So would it be fair to assume that normally we are paying $30 over the cost of production when we purchase a new game?




(I know that when you assume... )

Duran

No, it's not fair to assume that. Software development is a high fixed cost product. The cost is in the development, not in the production of the actual DVD. So the amount of your purchase price that is "cost" depends on how many copies are sold. If they sell a billion copies, it's very, very little. If they sell 2, it's a lot.

s}{ammer

I would think they are going to make bank on it. First, the only real money goes into development, once that is paid off the only other costs would be the disc, box, manual and advertising. Not sure but I think they will do very well by doing this.

Noonan

The cost of the product itself is very low. I would imagine under $10 per unit. What you're paying for is all the development that went into making the game. Each time they sell a game, they are "making" money. The cost of the game just determines how many units they have to sell to make up for all the development costs to turn it into a profit.

fujishig

They shouldn't be taking a loss on this, as there is nowhere else for them to make up the money (as in console makers selling consoles at a lost, but making it up with game licensing and peripheral sales). They must figure that the increased sales volume will at least partially make up for the decreased price (as even die-hard madden fans might drop 20 bucks to pick it up and try it), and that next year they should have an increased fanbase (though they'll be hard-pressed to raise the price back up). If you remember a couple of years ago, NFL 2K3 (the Urlacher one, before the ESPN license, I think) got so trounced by Madden that it was at a bargain bin price within a month of release.

That being said, I'm sure the NFL and players licenses alone, not to mention the music rights, etc., add up to a whole lot, and that's even before the development starts. I'm interested to see how this experiment goes. It got me to buy the ESPN series, after skipping last year's for the first time since Sega started making this series.

Breakfast with Girls

It's worth it to get their foot in the door and take even a portion of the market away from Madden for 2k6.

DAC

What do you figure it costs to develop a game such as this? I understand that since the pressing of the DVD-Rom may only cost $9-$10 so even at $20 a pop they are making $10-$11 per game sold. Just wondering how many games they will have to sell to make up for the lower price.

I agree, they may have a hard time raising the price next year after this. Maybe this will set a trend and all games will drop in price.

wildcatlh

One thing this isn't taking into account though... is the cost of the NFL/NFLPA licenses. Which is a lot.

But... I'm normally a Madden guy. And I plan to still get Madden. But I picked up ESPN 2K5. And I wouldn't have if not for the $20 price point.

fujishig

This does set a very dangerous precedent for game companies. It's great for us, since all of us love bargain games, but sometimes we fail to realize how it affects the industry. If Sega can put this out for 20 bucks this year, how are they going to justify going back to full price next year? Won't this become the expectation for other first rate games, to come in at a low pricepoint?

I'm really surprised they didn't just go for a thirty dollar pricepoint or something around there. I do believe game prices can drop a little: a good example of this is the GBA, where new games started out costing around 40 bucks and now are normally 30 or below. But going for the recognized bargain bin/greatest hits price of 20 bucks for a marquee just released game is unprecedented.

I mean, I love the fact that I can go out and get a great game like Prince of Persia or Black and White for 20 bucks, just a few months after release. But what this really indicates is that these games didn't sell nearly as well as they should have...

jeffdsmith

GreenMonkey

(Not a sports guy here)

I figure they can afford it because most of the base code, etc is already written. Each year it is merely improving the last. It's not like the game has to be written entirely from scratch (like a 100% original game).

A good move on their part.

Hell, I will probably pick up NHL 2K5 for the great price. Last hockey game we bought was EA's 2001

Michael T Hudson

I hope so I would buy a lot more games at 20 bucks each. I will still buy 2k6 for 50 next year if it does go back up.

Feneant

I did not pick it up as I cant stand football, but if they released NHL2K5 for this price and other fun 4 player sports like golf, I would definitely get all of them.

jrutz

My take is they are going to stay at the $20 price point for current generation systems, and then move to a $50 price point for next generation systems when they come out.

Jeremy

Noonan

Agreed.

gameover2k2

Sega will gain some ground at $20
EA will be forced to come down to at least $40..
Then depend on the situation, Sega maybe able to move up to $30.. and then EA will respond/or not

RUN-DvdMC

Ebgames.com has both ESPN Basketball and Hockey coming out this year at this price point.

Cyberock

I can't see how they would be taking a loss. I've known employees at different software companies and they all seem to be able to buy their company's games at $10 each. Companies won't even take a loss when they sell to their own employees so I'm sure Segais making money on this.

Tigger

EA will most likely stick to their price. They know their fan base is large and more importantly loyal. More than likely, most fans of EA will buy EPSN just to compare. EA needs to do double digits millions in sales numbers in order for Madden to be a "success". Most of these games take 5-6 million to make at a minimum. Licensing rights, VO talent, marketing are the main costs. The models are generally updated along with fields and new UI's created but the same shell and tweaks to the engine. Either way, it's millions to make and like DAC said, it will most likely take Sgea a while to see any revenue. My feeling is that they're coming in low to build the fan base. Long term goal.

fujishig

Basketball too? Sweet...

Although I generally consider Madden and ESPN/2K to be equal, I much prefer ESPN/2K to NBA Live...

Feneant

I saw on Compusmart that all titles are only 30$ (Cdn, so 20$ US)

darkside

I'll buy em all if they stick to $20.

yukon-cornelius

Yes, they are losing a small amount at the $20 price point, if mostly for the licensing fees and assorted costs that the coaches, players, and referees unions throw onto this game, in addition to the whole "National Football League" organization.

On the plus side, when you consider most "A-list" games cost $10-15 million to produce, it's quite possible they'll make their money back, as long as they sell over 500,000 copies. Also helping the fact is a revenue model very similar to movies, where software publishers get 90% of the money for the game in the first X weeks, then the %'age slides down as the game remains out in the market. Large stores, such as EBGames, might also negotiate larger profits if it means requiring their employees to wear lanyards, or answer the phone with "home of ESPN NFL 2K5", or whatever a company can do to humiliate its own workers.

Finally, you have the ESPN license itself, which if you've been following videogames has been DESPERATE for editor-choice-level games for the last 10 years or so. $10M to ESPN is like the profit of 1 good weekend of games, and together with practically free advertising on any Disney/ABC channel incl. ESPN itself, the funny money will eventually work out to a profit for everyone.

You have to admit, at this price point, parents are going to look at a $20 box and a $50 box (Madden) ... provided there's enough stickers on the outside of ESPN to exclaim it has a "9.x" rating from some respectable rating ... and tell the kid they can have 1-2 other games + ESPN, or they can just have Madden, and I think you know what the kid will choose.

I'm just anxious for next year's games, when Madden will come down to a more realistic price point. After all, when you sell 3M copies at $50 each, don't you think there's some wiggle room that EA can come down to the consumer, even if they don't have a co-brand who can help absorb the development cost up-front?

darkside

This game is flying off the shelves from what I can tell. Several people were in Gamestop tonight and everyone including me left with ESPN NFL 2K5. Its going to sell over a million I would bet. Not to mention take a chunk out of the Madden market.

The $20 price point combined with coming out first was a nice move. I have no idea if they will make any profit on the game, but its definitely gotten people to notice the series that may have been Madden only before.

broadwayblue

where did you read that it costs them $10/disc? i can press them for 50 cents each...and i only buy 25 count spindles of dvds. granted, i don't print a pretty picture on them or put them in a nice case. even still, i would be surprised if they paid more than $2 or $3 per package. i mean they're not ordering a dozen of them.

how much they pay for productions costs as well as liscensing fees to the NFL and Microsoft is another question.